Daily FX & Market Commentary: Strength On Wall Street Lifts S&P 500 Above 1,500

Daily FX Commentary: (Morning Report)

EUR/USD 

No changes in the near-term price action seen in past couple of sessions, as the pair remains in a sideways mode, entrenched within narrowed 1.3264/1.3370 range. Studies on 1 and 4h charts hold neutral mode, with break of either side to signal fresh direction, however, clearance of the wider range boundaries at 1.3255 and 1.3400, is required to confirm. 

Res: 1.3350, 1.3370, 1.3386, 1.3400 
Sup: 1.3300, 1.3280, 1.3264, 1.3255 

GBP/USD 

Cable holds 1.5800/1.5900 in past three-days, after finding temporary ground at psychological 1.5800 level. However, near-term tone remains aligned to the downside, as recovery attempts were capped under initial 1.5900 resistance, by descending hourly 20 day EMA and Fib 38.2% of 1.6038/1.5801 descend. Improvement of the near-term structure required break above minimum 1.5950, Fib 61.8% and 55 day EMA, to avert immediate downside risk of losing 1.5800 handle that may accelerate bears towards 1.5750 and 1.5700. 

Res: 1.5851, 1.5882, 1.5891, 1.5900 
Sup: 1.5811, 1.5801, 1.5753, 1.5700 

USD/JPY 

Bounce from 88.00, where the price find support, reduces downside pressure, as gains through psychological 89.00 barrier, retraced over 61.8% of 90.23/88.05 fall at 89.44. Improved hourly structure sees potential for stronger recovery, however, still weak studies on 4h chart, require regain of 90.00, to confirm recovery and re-focus 90.23 peak. Psychological 89.00 level now offers support and is reinforced by 4h Ichimoku cloud top and 20/55 day EMA’s bullish crossover, with break here to weaken the structure. 

Res: 89.44, 89.72, 90.00, 90.10 
Sup: 89.00, 88.87, 88.63, 88.40 

USD/CHF 

Recovery attempt off 0.9270 zone, where the pair found support, cracks 0.9300 barrier and 0.9317, Fib 38.2% of 0.9387/0.9274 decline, signaling possible further extension higher, as hourly studies turned positive. With 4h structure gaining momentum,. Scope is seen for attempt towards 0.9350 breakpoint, previous highs and Fib 61.8%, to confirm base at 0.9280/70 zone and re-focus 0.9387 and 0.9400. 

Res: 0.9319, 0.9330, 0.9350, 0.9387 
Sup: 0.9300, 0.9283, 0.9273, 0.9248 

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Daily Market Commentary: (Evening Report)

London Market Report

Footsie jumps one per cent as economic data impresses

    Market Movers
    techMARK 2,246.01 +0.71%
    FTSE 100 6,264.91 +1.09%
    FTSE 250 13,066.44 +1.02%

Better-than-expected economic data lifted the FTSE 100 over one per cent higher on Thursday afternoon, as markets shrugged off disappointing results from the world’s largest technology company,Apple.

American jobless claims and a US manufacturing survey from Markit came in better than forecasts today, sending London’s benchmark index surge in afternoon trade. Meanwhile, the Conference Board’s composite index of leading indicators increased by 0.5% in December, better than the +0.4% expected.

“All three releases have fuelled hopes for a strong recovery in the US allied with growing optimism that US lawmakers do have the will to agree on spending cuts and raise the debt ceiling without playing the same game of brinkmanship they participated in before the end of 2012,” said market strategist Ishaq Siddiqi from ETX Capital.

The S&P 500 in New York topped 1,500 following the news, the first time it has reached that level since 2007. The Dow also rose strongly, though the tech-heavy Nasdaq was being weighed down by a 10% drop from iPhone maker Apple after both revenues and profits missed forecasts.

Better-than-expected economic figures from Europe and China also lifted the mood today: the Chinese HSBC flash manufacturing purchasing managers' index (PMI) rose from 51.5 to a two-year high of 51.9 in January (consensus: 51.7); meanwhile, the Eurozone composite PMI increased from 47.2 to 48.2 in December (consensus: 47.5).

ETX Capital’s Siddiqi highlighted this afternoon that the FTSE 100 was outperforming other European indices today. He said: “Traders are citing rumours around tomorrow's Q4 GDP figures but it must be noted that the FTSE100 did underperform its European peers in 2012 so technically, there is plenty of room for upside. We are likely to see the index catch up with European peers through this year, especially if we continue to see more encouraging signs from China, the world's biggest consumer of commodities.”

Consensus forecasts are for a 0.1% quarter-on-quarter contraction in the UK economy in the fourth quarter of 2012, compared with the 0.9% growth seen in the third.

Europe Market Report 

European Markets Climbed On Economic Data 

The European markets finished Thursday's session in positive territory. Positive Chinese manufacturing data helped to overshadow some of the weakness caused by the disappointing earnings report from Apple in the United States. The Euro area private sector activity result also lifted hopes for a modest recovery in the region.

China's manufacturing sector activity rose to its highest level in two years in January as factory production picked up momentum, preliminary results of a survey by Markit Economics showed Thursday. The headline HSBC/Markit purchasing managers' index rose to 51.9 in January from 51.5 in December.

The marked improvement in Eurozone consumer confidence, as latest data showed, adds to hopes that the region's economy could at least stabilize in the first quarter, following an almost certain third successive quarter of contraction in the fourth quarter, IHS Global Insight Chief European and UK Economist Howard Archer said Thursday.

IHS Global Insight noted that the appreciable improvement in sentiment shows that Eurozone consumers are starting to become more upbeat about the economic outlook, although they still clearly have serious concerns over jobs.

The upturn adds to the evidence that the economic environment in the single-currency bloc has improved, and growth prospects are brightening following recent policy initiatives that have resulted in a substantial easing in sovereign debt tensions, the firm noted.

Bank of Canada Governor Mark Carney, next chief of the Bank of England said the governor should not overshadow the decisions of the central bank. At a press conference, Carney said he aims to ensure that the policy decisions do not rely too much on any particular individual.

"Part of my responsibility when I am there is that as the Bank of England gets additional responsibilities on the micro and macro prudential side, to ensure that the committee structure, the new governance structure, the other aspects, work to their full effect," he said.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.49 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.17 percent.

The DAX of Germany climbed by 0.53 percent and the CAC 40 of France advanced by 0.70 percent. TheFTSE 100 of the U.K. rose by 1.09 percent and the SMI of Switzerland gained 0.89 percent.

In Frankfurt, Commerzbank rose by 1.41 percent. The lender said it plans to slash 4000 to 6000 jobs at the Group level until 2016, with the exact amount of the reduction to be known after talks with the employee representatives.

US Market Report

Strength On Wall Street Lifts S&P 500 Above 1,500

Stocks are extending a recent upward move during trading on Thursday, with the S&P 500 climbing above 1,500 for the first time in over five years. However, a sharp drop by shares of Apple (AAPL) has helped to keep the tech-heavy Nasdaq in the red.

The major averages currently continue to turn in a mixed performance, with the Nasdaq posting a modest loss. While the Nasdaq is down 2.69 points or 0.1 percent at 3,150.98, the Dow is up 85.43 points or 0.6 percent at 13,864.76 and the S&P 500 is up 5.68 points or 0.4 percent at 1,500.49.

The modest loss being posted by the Nasdaq is due in large part to the steep loss being posted by Apple, with the iPad and iPhone maker down by 10.4 percent after reporting disappointing quarterly results.

After the close of trading on Wednesday, Apple reported better than expected first quarter earnings but on weaker than expected sales. The company also reported iPhone sales that missed expectations and provided disappointing second quarter revenue guidance.

Meanwhile, most stocks have moved to the upside on the heels of the release of a report from the Labor Department showing that initial jobless claims unexpectedly fell to a new five-year low in the week ended January 19th.

The report showed that initial jobless claims dipped to 330,000, a decrease of 5,000 from the previous week's unrevised figure of 335,000. The drop surprised economists, who had expected jobless claims to climb to 355,000.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 318,000 in the week ended January 19, 2008.

While the Labor Department said seasonal distortions are likely still in effect, Jennifer Lee, senior economist at BMO Capital, said the news on the job front is encouraging "even when you remove all of the noise."

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance during trading on Thursday. While Japan's Nikkei 225 Index surged up by 1.3 percent, China's Shanghai Composite Index fell by 0.8 percent.

In the bond market, treasuries have slid firmly into the red on the heels of the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.8 basis points at 1.861 percent.

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX & Market Commentary: European Markets Finished Mixed As Investors Await U.S. Vote

Daily FX Commentary: (Morning Report)

EUR/USD 

The single currency remains in a sideways mode after yesterday’s bumpy ride, with price hovering around 1.3300. Hourly structure, however, is still aligned towards the downside, as the price holds below MA’s and indicators are in the negative zone. While range floor t 1.3280 that proved to be solid support, stays intact, range-trading will remain in play, while break lower would signal a fresh direction and expose 1.3250 and 1.3200. On the upside, regain of yesterday’s spike high at 1.3370, would improve the near-term structure, but only clear break above 1.3400 to signal resumption of an uptrend from 1.2660, 2012 low. 

Res: 1.3331, 1.3370, 1.3400, 1.3485 
Sup: 1.3280, 1.3255, 1.3200, 1.3151 

GBP/USD 

Near-term structure maintains negative tone, as the pair, unable to regain initial barrier at 1.5900, returns to near-term base at 1.5800. Bears remain favored, with near-term studies in the negative territory, being supportive for possible slide below 1.5800 handle that will confirm break below 4-month range and open way for fresh leg lower, with 1.5750 and 1.5700 seen as next targets. Any bounce would be of corrective nature and facing strong resistance at 1.5900, 200 day MA, ahead of 1.6000, also 50% of 1.6380/1.5800, break of which is required to provide relief. 

Res: 1.5840, 1.5900, 1.5947, 1.6000 
Sup: 1.5805, 1.5753, 1.5700, 1.5675 

USD/JPY 

Yen continues to strengthen against the dollar, on a reversal from 90.23 peak, with initial targets at 88.00 zone being tested so far, just ahead of key near-term support at 87.78, 16 Jan low. As 87.78/90.23 rally has been nearly fully retraced, break lower remains favored for now, with notion being supported by negative near-term studies. However, corrective action may precede fresh bears, as hourly indicators reached oversold zone. Bounces are going to face good resistance at 88.90/89.00 area, where previous highs and Fib 38.2% lie, reinforced by descending 55 day EMA. Only break above 89.50 would delay immediate bears. 

Res: 88.36, 88.56, 88.78, 89.00 
Sup: 88.05, 87.78, 87.35, 87.00


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Daily Market Commentary: (Evening Report)

London Market Report

Stocks lifted by upbeat US earnings

    Market Movers
    techMARK 2,230.24 +0.32%
    FTSE 100 6,197.64 +0.30%
    FTSE 250 12,934.40 -0.18%

London’s FTSE 100 finished with moderate gains on Wednesday afternoon ahead of a key vote over the potential extension of the debt ceiling Stateside, as some decent results from US bellwethers Google, McDonald’s and IBM lifted sentiment across stock markets worldwide.

The US House of Representatives is to vote this evening on whether to extend the government's debt ceiling until May 19th. A White House spokesman said that President Barack Obama "won't stand in the way" of this short-term fix.

For the time being, traders will likely focus on tech giant Apple’s results after the closing bell this evening. Earnings are widely expected to fall year-on-year due to a drop in the gross margin, however the market’s attention will undoubtedly be on the company’s outlook for 2013 amid concerns over disappointing smartphone sales as of late.

In other news, the International Monetary Fund (IMF) has slashed its growth forecasts for the global economy, saying that the upturn is expected to be ‘more gradual’ than previously thought. The IMF expects world output in 2013 and 2014 to expand by 3.5% and 4.1%, respectively, down 0.1 percentage point from earlier forecasts.

Markets shrug off Cameron speech

UK Prime Minister David Cameron's much-anticipated 'in-or-out-case' speech on Britain's membership in the European Union didn't really move markets this morning.

He committed his party to holding a referendum on whether the UK should remain in the EU in the first half of the next parliament (by the end of 2017 at the latest). "It is time for the British people to have their say; it is time to settle this question over Britain and Europe," Cameron said.

Financial trader Shavaz Dhalla from Spreadex said this morning that Cameron's speech "proved futile". He said: "European markets took the speech in their stride and digested enough information to gauge that the speech was probably designed to build momentum for Cameron’s next campaign rather than mount a serious economic backing for whether remaining in the EU is worthwhile."

BoE in wait-and-see mode

Minutes from the latest Bank of England policy meeting showed that members voted eight-to-one in favour of leaving the asset purchase programme unchanged at £375bn. The Monetary Policy Committee (MPC) voted unanimously to keep the Bank Rate at 0.5%.

Analyst Chris Crowe from Barclays Research said that the MPC is "still content to wait and see" with the committee "likely to resist expanding QE as long as the economy shows signs of stabilisation and improvement."

Meanwhile, the UK jobless rate fell from 7.8% to 7.7% in the three months to November, better than the consensus estimate for no change. The UK claimant count fell by 12,100 in December to 1.56m, the lowest since June 2011.

Europe Market Report 

European Markets Finished Mixed As Investors Await U.S. Vote

The European markets ended Wednesday's session with mixed results. The markets received a boost from positive earnings results from European giants such as Unilever and Novartis, as well as results from Google and IBM in the United States. However, many investors were hesitant to take a position ahead of the vote to pass a short-term debt ceiling increase in the U.S. House of Representatives. President Barack Obama has stated that he would sign the bill if it clears Congress. Investors will also be watching for the earnings report from Apple later today.

European Central Bank President Mario Draghi observed Tuesday that the 'darkest clouds' over the euro area have subsided while countries reinforced their commitment to reforms. In a speech in Frankfurt, he said resolute actions by euro area governments and European institutions have made the year 2012 quite different than predicted.

Bank of England Governor Mervyn King said it would be sensible to review the arrangements for setting monetary policy. The inflation target was introduced in the U.K. almost 21 years ago, and it has now 'come of age', he noted.

In a speech in Belfast, King said late Tuesday that the economy needs more fundamental reforms to underpin a "gentle recovery." There are certainly aspects of the inflation targeting regime to consider, King added.

British Prime Minister David Cameron on Wednesday said that he is in favor of a referendum on the UK's membership of the European Union, but insisted that he does not want the country to drift towards an EU exit.

In a much-awaited speech in London, he promised to hold an in/out referendum on EU membership by the end of 2017, if re-elected. Cameron said the next Conservative manifesto in 2015 will ask for a mandate from the British people for a Conservative Government to negotiate a new settlement with the European partners in the next Parliament.

With a majority of 8, the Bank of England's policymakers voted to maintain quantitative easing unchanged at the start of the year, as they saw limited stimulus to the economy from further easing. Policymakers led by Governor Mervyn King unanimously decided to retain the record low 0.50 percent interest rate. The meeting was held on January 9 and 10.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.25 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.46 percent.

The DAX of Germany rose by 0.19 percent, but the CAC 40 of France fell by 0.40 percent. The SMI of Switzerland increased by 1.35 percent and the FTSE 100 of the U.K. climbed by 0.34 percent.

French business confidence deteriorated unexpectedly in January as manufacturers assessed sharp contraction in past production and forecast a deterioration on own production outlook. The business sentiment index came in at 86 in January, survey data from the statistical office Insee showed Wednesday. It was forecast to rise to 90 from 89 in December.

Spain's recession likely deepened during the three months ended December, with gross domestic product falling for the fifth consecutive quarter, the quarterly bulletin from the Bank of Spain said Wednesday.

Gross domestic product (GDP) is estimated to have dropped at a faster rate of 0.6 percent sequentially in the fourth quarter than 0.3 percent in the third quarter, signaling that the economy has slipped deeper into recession. GDP contracted for the fifth successive quarter.

Government debt in the Eurozone stayed broadly unchanged in the third quarter, data released by statistical office Eurostat showed Wednesday.

Total public debt in the single-currency bloc came in at 90 percent of gross domestic product at the end of the third quarter, little changed from 89.9 percent recorded in the second quarter. The latest figure was, however, higher than 86.8 percent recorded in the third quarter of 2011.

U.K. employment total increased to a record high during three months ended November after people out of work decreased, data from the Office for National Statistics revealed Wednesday.

There were 2.49 million unemployed people in the country during the three-month period, down by 37,000 from June-August. At the same time, the number of people in work increased by 90,000 to 29.7 million for three months to November, the highest since records began in 1971.

The employment rate edged up to 71.4 percent from 71.3 percent during June to August. But it was lower than the pre-recession peak of 73 percent logged for March to May 2008.

US Market Report

Stocks Give Back Ground But Remain Mostly Positive

After showing a strong move to the upside in early trading on Wednesday, stocks have given back some ground over the course of the trading day but remain mostly positive. The markets are benefiting from a positive reaction to the latest batch of earnings news.

The major averages have pulled back off their highs for the session but are currently all in positive territory. The Dow is up 59.85 points or 0.4 percent at 13,772.06, the Nasdaq is up 10.08 points or 0.3 percent at 3,153.26 and the S&P 500 is up 0.36 points or less than a tenth of a percent at 1,492.92.

The modest strength on Wall Street extends a recent upward move by stocks, with the Dow and the S&P 500 reaching new five-year highs earlier in the session.

Traders have largely reacted positively to the latest earnings news, with upbeat quarterly results from some big-name companies inspiring confidence that the markets can sustain some further upside.

Tech giants IBM Corp. (IBM) and Google (GOOG) are both posting notable gains after reporting fourth quarter earnings that exceeded analyst estimates.

McDonald's (MCD) is posting a more modest gain after the fast food giant reported fourth quarter earnings that rose year-over-year and came in above analyst estimates. The company also reported stronger than expected revenue growth.

Fellow Dow component United Technologies (UTX) reported fourth quarter earnings that fell compared to the year-ago quarter but still came in slightly above expectations. The diversified conglomerate also reaffirmed its guidance for 2013.

Shares of iPad and iPhone maker Apple (AAPL) are up by 0.8 percent ahead of the release of its fiscal first quarter results after the close of trading.

Nonetheless, buying interest has waned from earlier in the session, as traders remain somewhat reluctant to continue buying stocks following the recent strength.

Traders are also keeping an eye on developments in Washington, where the House is preparing to vote on a three-month extension of the U.S. debt limit.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2.1 percent, while China's Shanghai Composite Index rose by 0.3 percent.

In the bond market, treasuries are seeing modest strength, adding to the slim gains posted in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.1 basis points at 1.824 percent.

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.